BERA (Berachain)

Most recent update: [Feb 6, 2025]

What is BERA? 

BERA is the native utility token of Berachain, a decentralized Layer 1 blockchain network that utilizes a unique Proof-of-Liquidity (PoL) consensus mechanism. This high-performance blockchain is fully compatible with the Ethereum Virtual Machine (EVM), allowing developers to seamlessly deploy existing Ethereum-based applications. BERA facilitates network transactions, incentivizes liquidity provision, and supports an innovative tri-token model that powers various decentralized finance (DeFi) activities.

A key feature of Berachain is its PoL consensus mechanism, which addresses limitations found in traditional Proof-of-Stake (PoS) systems where staked assets are locked for other activities. PoL enables users to stake their assets while simultaneously utilizing them in DeFi protocols, promoting liquidity and continuous rewards. The network's modular Layer 1 architecture encourages flexibility and customization, allowing developers to create specialized blockchains tailored to specific use cases. This design also fosters seamless communication and asset transfers across different chains.

Berachain's community is vital to its growth and success. The platform fosters collaboration through initiatives like the Request for Community (RFC) and Request for Applications (RFA) programs, which support educational, social, and development activities. By allocating BERA token to eligible participants, Berachain promotes innovation and community engagement. As Berachain launches its mainnet in 2025, BERA's importance in network transactions, governance participation, and liquidity provision will grow significantly. This development will also establish Berachain as a key player in the DeFi landscape.

Who is Behind BERA?

Berachain was founded in August 2021 by a group of pseudonymous individuals known for their bear-themed personas. The key figures behind Berachain are Smokey the Bera, Papa Bear, Homme Bera, and Dev Bear. These founders initially introduced Berachain as a playful "fake chain," embracing a meme culture that reflected their unique identity. Over time, they have evolved Berachain into a credible and innovative player in the blockchain space. Throughout its development journey, the project garnered significant attention and recognition, attracting investments and partnerships from various stakeholders.

Shortly after its founding, in March 2022, Berachain gained credibility with the approval of the Olympus DAO OIP-87 proposal. This milestone secured a $50 million fully diluted valuation and a $500K investment. This marked Berachain's first major funding event. Later that year, the official Berachain Discord channel was formed, becoming the community's central hub, and the Band Bears NFT collection was rebased, expanding the ecosystem.

In April 2023, Berachain secured $42 million in a funding round led by Polychain Capital, which further cemented its standing in the Layer 1 blockchain space. By early 2024, Berachain launched its Testnet, showcasing its readiness for real-world applications. Later that year, Berachain expanded its influence in the blockchain sector by securing $100 million in a Series B funding round led by Brevan Howard Digital and Framework Ventures. With this new capital, the company announced plans to broaden its reach across Southeast Asia, focusing on Hong Kong and Singapore, and to explore emerging blockchain markets in Latin America and Africa. On February 6, 2025, the mainnet is launched, featuring a new consensus mechanism called Proof-of-Liquidity, which aims to better align the incentives of network participants while improving the security of the chain.

How does it work? 

Berachain is a high-performance Layer 1 blockchain designed to enhance DeFi through its innovative architecture. Built on the modular framework BeaconKit, Berachain is EVM-identical, meaning it uses the same execution environment as Ethereum Mainnet. This allows it to run existing Ethereum clients, maintain compatibility with Ethereum’s tools, and seamlessly adopt future upgrades such as Dencun.

What makes Berachain particularly distinctive is its PoL consensus mechanism, which radically redefines Layer 1 economics by prioritizing ecosystem liquidity over traditional validator rewards. This encourages users, protocols, and validators to contribute liquidity, thereby improving trading efficiency, price stability, and overall network health. Native dApps, such as BeraSwap, demonstrate how developers can harness PoL to create decentralized applications with high liquidity and user engagement.

Central to Berachain's design is its tri-token model, which optimizes liquidity, governance, and stability across the ecosystem. The three tokens—BERA, BGT, and HONEY—serve distinct yet interconnected purposes:

• BERA: The native utility token used for paying transaction fees and interacting with the blockchain.
• BGT: The governance token earned through liquidity provision and staking. BGT holders participate in decentralized decision-making by voting on proposals and influencing network development.
• HONEY: A stable coin pegged to USDC, designed to provide a stable medium of exchange for DeFi activities, protecting users from market volatility.

This tri-token structure allows Berachain to balance utility, governance, and stability seamlessly. It encourages liquidity provision and active participation while enabling a decentralized governance process and stable DeFi transactions. Additionally, the network's use of BeaconKit with CometBFT consensus enhances performance through single-slot finality (SSF) and increased composability. By combining EVM compatibility, PoL consensus, and a tri-token system, Berachain creates a robust and scalable ecosystem tailored for DeFi innovation.

The BERA Token and Tokenomics 

The total genesis supply of 500 million BERA is allocated across five categories.

• Initial Core Contributors (16.8%): 84 million BERA allocated to advisors and core contributors from Big Bera Labs.
• Investors (34.3%): 171.5 million BERA distributed to Seed, Series A, and Series B investors.

48.9% of the token supply, equivalent to 244.5 million BERA, is dedicated to fostering community engagement and ecosystem development.

• Airdrop (15.8%): 79 million BERA for testnet users, NFT holders, dApp contributors, and community supporters.
• Future Community Initiatives (13.1%): 65.5 million BERA for incentive programs, grants, and developer support.
• Ecosystem & R&D (20%): 100 million BERA for ecosystem growth, developer programs, node operations, and ongoing research.

As of February 6, 2025, the market capitalization of BERA stands at US $1,070,461,406.

Security 

Berachain takes a comprehensive approach to security. Its PoL consensus mechanism aligns validators' incentives with liquidity needs, reducing the risk of malicious activities. Additionally, the platform uses Delegated Proof of Stake (dPoS). This allows token holders to delegate their voting power to trusted validators, enhancing both decentralization and security.

To further protect users, Berachain supports hardware wallets that keep private keys offline and multi-signature systems that require multiple approvals for transactions. These features help users safeguard their assets and maintain control over their security.

Beyond security, Berachain is built for scalability and energy efficiency. Its modular architecture allows the network to handle increased transaction volumes without compromising performance, while also minimizing energy consumption. This design contributes to a sustainable and efficient blockchain ecosystem.

Drawbacks and risks 

One of the primary risks associated with BERA is market volatility. Like many cryptocurrencies, BERA is subject to significant price fluctuations. For instance, after its airdrop, BERA experienced a sharp decline in value due to selling pressure. This volatility can lead to substantial financial losses for users who may not be prepared for sudden changes in the token's value. It also makes it challenging to use BERA as a stable medium of exchange within the ecosystem, potentially affecting the overall stability of DeFi applications built on Berachain.

Another drawback is the transparency concerns stemming from the anonymous nature of Berachain's founding team. The bear-themed personas may raise questions about the project's long-term reliability and accountability. Users might be wary of the lack of identifiable leadership, which can impact their confidence in the project's future. The anonymity of the founders could be a barrier to wider adoption and utility.

Berachain, like all blockchain projects, faces potential regulatory risks. The evolving regulatory landscape for cryptocurrencies and blockchain technology can pose challenges for Berachain's operations and adoption. Regulatory scrutiny could lead to restrictions or requirements that might impact the network's functionality or the use of its tokens.

Due Diligence  

Before listing BERA on the VirgoCX Platform, VirgoCX performed due diligence on BERA and determined that BERA is unlikely to be a security or derivative under Canadian securities legislation. VirgoCX’s analysis includes reviewing publicly available information on the following:  

• The creation, governance, and location of BERA and/or its primary development team; 
• The supply, demand, maturity and liquidity of BERA; and 
• Legal and regulatory risks associated with BERA.  

Statutory Rights under Securities Legislation 

VirgoCX is offering Crypto Contracts on crypto assets in reliance on a prospectus exemption contained in the exemptive relief decision Re VirgoCX Inc. dated May 30th 2024 (the Decision). Please be aware that the statutory rights in section 130.1 of the Securities Act (Ontario) and, if applicable, similar statutory rights under the securities legislation of each other province and territory in Canada do not apply in respect of the Crypto Fact Sheet to the extent a Crypto Contract is distributed under the prospectus relief in the Decision. 

Further Reading 

To learn more about the technology behind BERA, check out these in-depth resources here: 

• The official site of BERA
• Coinmarketcap’s overview of BERA
• Coingecko’s tokenomics overview of BERA
• Coinbase’s overview of BERA, along with the relevant news and blogs related to BERA.